Thursday, April 06, 2006

Venezuelan president Hugo Chávez is poised to launch a bid to transform the global politics of oil by seeking a deal with consumer countries which would lock in a price of $50 a barrel.

A long-term agreement at that price could allow Venezuela to count its huge deposits of heavy crude as part of its official reserves, which Caracas says would give it more oil than Saudi Arabia.

"We have the largest oil reserves in the world, we have oil for 200 years." Mr Chávez told the BBC's Newsnight programme in an interview to be broadcast tonight. "$50 a barrel - that's a fair price, not a high price."

We might assume that anyone who rises to the top of a large organization is not dim. We know - and Mr. Chavez has to know, that putting an artificial cap on a price smooshes the market. It also puts off the need to develop alternatives to whatever is scarce. Cap oil at an artificially low price and the need to develop solar, wind and other alternative power sources goes right out the window. We won't need SPS either.

Venezuelan president Hugo Chávez is poised to launch a bid to transform the global politics of oil by seeking a deal with consumer countries which would lock in a price of $50 a barrel.

A long-term agreement at that price could allow Venezuela to count its huge deposits of heavy crude as part of its official reserves, which Caracas says would give it more oil than Saudi Arabia.

"We have the largest oil reserves in the world, we have oil for 200 years." Mr Chávez told the BBC's Newsnight programme in an interview to be broadcast tonight. "$50 a barrel - that's a fair price, not a high price."

We might assume that anyone who rises to the top of a large organization is not dim. We know - and Mr. Chavez has to know, that putting an artificial cap on a price smooshes the market. It also puts off the need to develop alternatives to whatever is scarce. Cap oil at an artificially low price and the need to develop solar, wind and other alternative power sources goes right out the window. We won't need SPS either.